Providing false information about one’s assets may be a criminal offense

INFORMATION PROVIDED ON THE TAX RETURN MUST BE TRUTHFUL

If a taxpayer provides false information to the tax office to avoid enforcement measures, this may constitute a tax offense. A German citizen was forced to pay a significant amount of back taxes due to inaccurate tax returns and was additionally sentenced to two years’ probation for tax evasion. When the tax authority sought to collect the assessed taxes, he failed to pay them. The authorities initiated enforcement proceedings, in which the delinquent taxpayer was required to submit a statement of assets.

Although he demonstrably possessed considerable assets, he had ostensibly transferred assets to third parties and subsequently knowingly and falsely claimed that he was destitute. In addition, he submitted an affidavit, but even in that document he concealed significant portions of his assets.

THE JUDGMENT

The case reached the Federal Court of Justice. Even though the false tax return was already considered a tax offense, the judges held that additional tax evasion could also be committed during the collection proceedings. The inaccurate letter or the inaccurate self-disclosure regarding his financial circumstances was deemed to constitute an act of (further) tax evasion. This is because financial circumstances are material facts that are important for the tax office’s decision on whether and which enforcement measures to take.